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January 04, 2007

Richard Florida

$32 million question

« Tolerance matters | Main | Bob Sutton on Pam Slim on Bob Knight »

It's only half of the proverbial $64 million, I know, but I was flabergasted to learn that's how much the University of Alabama paid to lure football coach Nick Saban from the Miami Dolphins to become their new coach. Economists have a very useful concept they use to consider "investments" like this. It's called an "opportunity costs" - which basically means what the money could be otherwise used for.  In this case,  $32 million could be used to endow 10 or 20 professorships in perpetuity, essentially creating a whole new department or research institute forever.

Over at Free Exchange Isaac Bickerstaff poses a good question:

"...why are America's institutions of higher learning also operating semi-professional sports franchises?  Especially since overall, the athletics department is a money-losing proposition for most schools.  They also bring down the value of the university's core "product", as schools offer places and often lavish scholarships to academically unqualified student athletes."

To which Tyler Cowen adds:

The evidence is mixed, but some papers find a connection between athletic achievement and student quality, or athletic achievement and alumni donations.  I suspect the donor connection is the key, but we also must ask what exactly colleges and universities seek to maximize. 

Under one view, there is some local market power, a surplus from tuition and endowments, fairly passive boards, and a faculty-driven governance structure which gives Presidents considerable discretion over non-instructional projects.  If I were a University President, I would spend money on the library, a very good music school, a concert hall, and -- if they would abolish the NCAA and the zone defense -- a basketball team.  Basketball is The Queen of Sports, and what better way to entertain local bigwigs and receive favors in return?

Your thoughts?

$32 mill


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Michael Bindner

Some of that $32 million is part of the "Executive Culture" which is an artifact of hierarcy.


Michael, I think you're right about the "artifact of hierarchy" component of executive culture. I find the fact that football is considered part of "executive culture" to be an interesting thing. Football? Then again, I lived in Birmingham for the longest year of my life in the 80's. I didn't get it then, and I don't get it now. Priorities/utility issues. Hence, I left as soon as I possibly could.

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